Since I’ve become involved in bitcoin, I’ve been asked a lot of questions about it and altcoins – and I’ve have seen a number of friends and family take action. There seems to be somewhat of a progression as to the way people view bitcoin, and the questions they ask as they learn more about it. So I thought I’d outline my observations and answer some “altcoin” questions.
- You mean there’s a limit to the supply, and I gain control over my own money? How can I buy some bitcoin?
- Wow – setting up a wallet is a pain! But okay, I’ve done that…now what?
- Do I have to buy a whole bitcoin? What if I don’t have $2000+ right now?
- Great! I’ve now bought a little Bitcoin – but what are all these other altcoins?
- Should I should buy some of these altcoins, like Ether or Ripple?
- What’s the purpose of these other coins? How do I choose which one to buy?
- Should I buy the most popular ones? Or the ones going up in price?
- Is there a benefit to buying some of these altcoins that are only pennies?
Yes, there is a limit to the supply and the demand is going up. Yes, you gain control over your money – but first you have to setup an online wallet. Setting up a wallet takes a bit of time, but once it’s done you’re all set to buy or sell digital currency. Unfortunately, there isn’t one wallet that allows you to buy bitcoin plus all the altcoins out there – but some do offer more options.
You do NOT have to buy a whole bitcoin. Because it is digital, you can buy a fraction of one bitcoin – same with the altcoins. Only buy what you’re willing to risk, as the price changes frequently and nobody knows if it will continue to go up, or if it will decrease overnight. Once you’ve bought some bitcoin, if you want to get into trading, you can checkout the Trade Coin Club and see if investing to take advantage of the daily compounding of earnings is a good fit for you.
Altcoins are just alternative cryptocurrency to the Bitcoin, and they vary a lot in the way they are developed, mined, marketed, etc. Anyone can make their own coin. The code is open source (free) and if you can understand the source code – you can create a new coin. However, making a new coin with a new purpose takes a lot of development work. The majority of altcoins are “forks” of Bitcoin with small, and often uninteresting, changes. But there are some which have new innovations and are worth a look.
Some people buy altcoins as a way to hedge against Bitcoin. Reasons vary, but for example, if Bitcoin had some catastrophic failing (not likely, but it could happen) – certain altcoins may not also be susceptible. Also, certain altcoins have a purpose that is significantly better or different than Bitcoin – so they may have a good future. And last but not least, there is always going to be room for niche altcoins that may be specific to a certain industry or purpose.
Altcoins have to compete with Bitcoin – not the other way around. Bitcoin has a proven use case as a store of value, with a huge lead over every altcoin out there since it has existed for 8+ years without failure. Bitcoin’s security has been proven far more than newer counterparts with usage by almost every metric. It is also far more accessible, can be bought and sold on most exchanges, is supported by more hardware and software, and it is far more liquid than any other altcoin. With the largest developer ecosystem, more software and more implementations, Bitcoin has more entrepreneurs orbiting to create new companies than any other altcoin – at least for the time being. So altcoins face stiff competition – Bitcoin does not.
This is not to say that buying certain altcoins is not a good idea – but buying them just to buy them isn’t a good idea at all. At least learn the purpose of the altcoin before buying it. Altcoins are not really a great hedge against Bitcoin. As it evolves, Bitcoin will grow in unexpected ways when new use is discovered, thus increasing its usefulness over time. Whereas altcoin owners have more risk that the coin will fall into disuse and be, well…useless.
While there are tons of altcoins – I am only providing explanation of the ones I have investigated and personally invested in.